BILL O'REILLY, HOST: Tonight's top story: Karl Rove makes his debut on "The Factor." Mr. Rove recently resigned as one of President Bush's top advisers. He joins us now from Connecticut. Are you ready for this?

KARL ROVE, FORMER BUSH ADVISER: Yes, sir. Absolutely.

O'REILLY: All right. OK. You look a little — you know, just relax now.

OK, I'm going to put you in the hot seat right away. You're Hillary Clinton's adviser. She hires you tomorrow. You tell her what to turn this thing around?

ROVE: Well, it's going to be awful tough to turn around. First of all, she needs to minimize the losses in the short run. She's got the primaries tomorrow night in Virginia, Maryland and D.C. She's done a pretty good job in getting a lot of strength in Maryland and lowering expectations about how well she's going to do there. But she's got — you know, and in the successive weeks Wisconsin's not going to be good for her. Hawaii's not likely to be good for her. Puerto Rico's likely to be good for her. But she's got to make certain that the expectations that she's now set for Ohio and Texas on the 4th of March are met.

O'REILLY: So she has to win those outright because Obama's starting to draw away in delegates. He'll weigh in according to Mason Dixon, the polling service. He's way out in front in Virginia, D.C. and Maryland.

ROVE: Right.

O'REILLY: And everybody expects McCain and Obama to win big in those three places. Now, so the last stand, the Alamo, if you will, is Texas. But she also has to win Ohio.

ROVE: That's right.

O'REILLY: And if she doesn't win those, does she throw in the towel right away or take it to the convention and kind of do this dance with the super delegates? What happens?

ROVE: Well, she's got several other cards to play. And she ought to start playing some of them now. For example, I find it hard to believe the Democrats are going to be able to meet in Denver and not have delegations seated from Michigan and Florida, states that she won. Right now, the Democrat rules say because they were earlier than the deadline set by the Democratic National Convention or Committee, that they get no delegates. I find it hard to believe that we're going to have a 48-state Democratic convention. So she ought to be out there now declaring, you know, that she believes there ought to be fairness and that some delegations — she can even ape the Republican National Committee and say half the delegates for Michigan and Florida should be seated.

O'REILLY: All right.

ROVE: In which case, she would get them.

O'REILLY: I got all of that. I got all that machination, but aren't I brilliant to say, Mr. Rove, that that ain't going to help? It's whoever wins the raw vote from the folks? You cannot deprive Barack Obama of the nomination by bringing in this one over here and having Lenny over there and all of that. That can't happen. They'll be a rebellion within the party if that is tried.

ROVE: I would be — slightly different. I think she's got to win a majority of the delegates who are elected in caucuses and primaries, which is a little bit different than saying, OK, simply because a particular state might have had a larger than normal turnout, that therefore we ought to take that into consideration when looking at the country as a whole. So I think the question is does she get a majority of the delegates...

O'REILLY: Right, if she's leading with delegates, then all bets are off. And Obama will get the VP.

ROVE: Yes, look, Texas and Ohio are going to be very difficult for her if he gets up a big head of steam here. I got to tell you, if I were them, I would be very nervous about the fact they had such high expectations for Maine. In Maine, they lost 3 to 2...

O'REILLY: And they got crushed in Washington state, which is, you know, they never thought they would.

ROVE: Well...

O'REILLY: All right.

ROVE: Well, no, they expected that. The key tomorrow night is going to be how big the gap is. And if the gap is as big as Mason Dixon predicts for both Virginia and Maryland, it's difficult because she's losing both of them by better than 3 to 2.

O'REILLY: They have no "mo" at this point at all in a new campaign.

Now let's go over to the Republican Party. It looks to be in disarray. Looks to be in absolute disarray.

ROVE: No, I disagree. Look, you've got to take the difference between sort of what's going on on the surface and what's going on underneath the surface. You take a look at the last FOX poll when they did the head-to-head matchups between McCain and Obama, I've got them right here.

Eighty percent of the Republicans say they're for McCain against Obama. Ten percent of Republicans say they're for Obama versus McCain. Among Democrats, McCain takes 18 percent of the Democrats, almost twice the percentage that Obama takes among Republicans. And Obama is 74 percent of Democrats as opposed to the 80 percent of Republicans for McCain. So McCain is doing better consolidating his base than is the Democrats. Similar numbers for...

O'REILLY: All right, that's interesting analysis.

ROVE: ...matchup with Hillary Clinton.

O'REILLY: That's an interesting analysis. Now President Bush...

ROVE: So...

O'REILLY: I only have two more minutes with you. I'm going to extend it, Mr. Rove, another three. I'm going to give it another minute because I have a lot of questions.

President Bush is at 30 percent approval right now. Does that mean he can't campaign? Does that mean he can't go out? Is that too many negatives attached to him?

ROVE: What it means is he can go help raise money for the Republican National Committee and for the state victory committees. And he can take on assignments that might otherwise draw the time with the Republican presidential candidate and the Republican vice presidential candidate. He's got a big role to play, particularly in making sure the Republican war chest is as filled as it can be.

O'REILLY: OK, so it's a money — it's not him on the stump. Now...

ROVE: Well, look, it never is either. I mean, you know, the presidential candidate necessary — the president necessarily recedes into the background. People are concerned about what's coming, not what's past. They're concerned about the future, not the past.

O'REILLY: OK. And that's what happened with Ronald Reagan. And even Bill Clinton didn't show up for Al Gore.

Thirty percent, why? Why does 70 percent of the country not approve of the president's performance in office?

ROVE: Look, there's a high degree of frustration with the war in Iraq. Now part of that frustration is people want to be winning, and part of the people want to be withdrawing. But there are a lot of people — Senator McCain, for example, says look, I disagree with the conduct of the war. I believe in the strategy of the surge. It's working, but I'm dissatisfied with the conduct of the war. There are people like that sitting out there among that 70 percent.

O'REILLY: So you think it's Iraq driven. The negativity toward President Bush is Iraq driven?

ROVE: I think it's principally. I think the economy — the media has been beating the drum for years and years and years that the economy stinks. And after a while, that begins to color people's attitudes.

But look, the president is not going to be on the ballot. The Democrat Congress is going to be on the ballot and so is the Democratic nominee. And the president understands the role that he needs to play in this election, and he'll play it. But that role is not to be front and center on stage...

O'REILLY: OK.

ROVE: ...and directing the music.

O'REILLY: Who's the tougher candidate for the Republicans: Obama or Hillary?

ROVE: You know, you can make a case for each one of them.

O'REILLY: No, but you tell me. You're the guy. You tell me.

ROVE: Well, my gut tells me that over the long haul, Obama is. Look, he is inexperienced and does not have what is needed to be the commander in chief. And he's the most liberal member of the United States Senate. If a Republican presidential candidate can't make meat, you know, mince meat out of that, I don't know what.

On the other hand, Clinton has very strong negatives. On the other hand, she has very strong positives. In fact, what's interesting to me is that in the FOX poll, she does better at grabbing — at keeping Democrats in her column than does Obama. She sees 15 percent of the Democrats sliding over to McCain. He sees 18 percent. And I think that's because there is a weakness among some Democrats who view Obama as not fit to be commander in chief.

O'REILLY: All right. Mr. Rove, nice to have you here at the FOX News Channel. And we'll be speaking to you on a regular basis throughout the campaign. We appreciate it very much.

ROVE: You bet. Thank you, Mr. O'Reilly.

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